PRESIDENT Umaru Musa Yar'Adua yesterday said that deregulation of the petroleum sector was inevitable to curb corruption and other abuses in the system.

His Special Adviser on Petroleum Matters, Dr. Emmanuel Egbogah, spoke in a similar vein, saying that it was the only panacea for concrete reform in the sector and the sure guarantee for long term stability and lower prices for petroleum products.

According to the President, his Administration is holding consultations and dialogue with all stakeholders to explain the necessity of the action.

Yar'Adua told the visiting British Minister of State for Africa, Baroness Glenys Kinnock, at the Presidential Villa Abuja that "we are committed to deregulation, because we are convinced that subsidy distorts the system, encourages corruption and creates more problems than it solves. We are aware that initially, there will be pain, but these will be temporary and the whole nation will be the better for it."

The President said the Petroleum Industry Bill (PIB), now before the National Assembly, was aimed at repositioning the Nigerian National Petroleum Corporation (NNPC) to become a transparent, accountable and profitable business concern, without any budgetary provision from government and freed from its regulatory functions.

He assured Kinnock that after on-going negotiations with international oil companies about the Bill's fiscal regime, investors would realise that the interests of all stakeholders in the oil sector are protected.

Responding to Kinnock's concern about electoral reform in Nigeria, Yar'Adua said political parties need more internal democracy, while all participants in the process must discharge their responsibilities according to law.

The President said: "Electoral reform is necessary and is within the capacity of the National Assembly to amend the Electoral Act, but we must also realise that the role of political parties can be more devastating than the umpire's failings. We need internal democracy in the political parties, development of a culture of putting national interests first, as well conscientious discharge of functions by all officials involved in electoral jobs".

The President also briefed the British Minister about the progress of the post-amnesty programme, and requested for assistance in building capacity of those managing the exercise and the electoral reform process, as well as funding for them.

Earlier, Baroness Kinnock had commended President Yar'Adua for the success of the amnesty programme, the banking reform and offered British assistance to ensure they succeed.

Egbogah also said that plans to grant 10 per cent equity position to petroleum producing communities in all the oil areas and businesses was part of the President's post- amnesty measures aimed at giving a sense of belonging to them in the resources coming from their land.

Egbogah however explained after a meeting with Yar'Adua at the Presidential Villa that the details of the workings of the 10 per cent equity grant were being fine-tuned and would be sent to the National Assembly for incorporation in PIB still pending in the legislature.

Egbogah also said that the planned deregulation of the downstream sector would work, regretting that most people still do not understand the essence of deregulation.

According to him: "They (people) take it that deregulation is to increase prices whereas it is the opposite. It is deregulation that will bring down prices because when we have full deregulation and competition is introduced into the business, people will be under cutting themselves and everyday prices will be going down and eventually it will reach the bottom. Of course at the beginning maybe the price will be high. But this competition is what is going to drive prices down. This is what happens everywhere in the world. Many don't understand this. They think that deregulation is only in the oil and gas industry. Meanwhile, the food you buy day to day is being deregulated and the prices move according to demand and supply. This is something we should have done long ago. But for the survival of our oil industry this must be done.

"It will bring down prices and everyone will enjoy its benefit. The refineries will work and they are being fixed. It is a part of the deregulation programme because the refineries must be able to work to provide ample supply of products just like many other factors that we are now bringing on stream. The compressed natural gas system, it will provide the products that are even at half the rate that we are giving them today. A lot these measures that the government is taking are to ensure that this deregulation itself will work. So, a lot of these programmes will be brought to play to be able to stabilize the deregulated environment."

On the 10 per cent equity, Egbogah said: "This will give 10 per cent of what we get as revenue interest to the host communities from the overall, the entire oil production in the country, provided it is from the oil producing communities. The logistics of the implementation is such that it will take us quite a couple of months to go through all the processes to confirm the qualification of all the communities from those communities that fall within our guidelines and approve of it.

"So, I will say that you may be correct to say it is about 2010 that we may be able to commence the implementation. And that it is part of the plans to make the amnesty programme work. Of course, there are a lot of programmes to make the amnesty work but this is the mother of all resolutions because we are now granting to the host community 10 per cent in the oil business in Nigeria. This is very big, much bigger than the 13 per cent derivation that the States are getting. So, there is nobody in the oil communities who will have any justification to raise alarm over what is happening there because the business is yours now. This is not a short time measure. That is why I say it is going to be passed by the National Assembly and incorporated in the Petroleum Industry Bill and that becomes a law."

He added: "The question to be asked is, why is it that all these years it has not been done. And this is the root of all the problems, all the militancy and all the agitation. But now, we are saying many people were asking for five per cent. But now, this government is granting them as much as 10 per cent. Anywhere in this world, this is very significant. Therefore, there cannot be any room for agitation or militancy in the Niger Delta anymore."

The Governor of Akwa Ibom State, Chief Godswill Akpabio, also said at the Presidential Villa that the 10 per cent equity grant was an opportunity for the neglected areas "to partake in the exploitation and exploration of oil in your communities by having 10 per cenrt of the equity participation of the federal government within the NNPC. This is a wonderful development for the Niger Delta."

Akpabio therefore implored the National Assembly to ensure that the equity holdings for the oil producing communities was passed into law through the PIB.

In the meantime, the House of Representatives Committee on Downstream Sector yesterday said it would support the privatisation of the ailing refineries.

The committee's chairman, Mr. Clever Ikisikpo, who led the lawmakers to inspect the NNPC depot at Atlas Cove and other private depots used in distribution of fuel in the country, backed the selling or leasing out of the refineries to enhance optimal utilization.

The legislator also gave the committee's nod for deregulation of the downstream sector, " in the best interest of Nigerians."

Ikisikpo, who emphasized that the government could not continue to pay subsidy on the fuel imported into the country, explained that deregulation was imperative to break the monopoly in the downstream sector.

He decried a situation whereby some unscrupulous people in the industry were taking advantage of the subsidy to cheat the government.

Ikisikpo therefore enjoined the Labour unions and other civil society groups to embrace deregulation

After an inspection of facilities belonging to the Pipeline Products Marketing Company (PPMC), Capital Oil and Folawiyo, the committee expressed satisfaction at the state of the infrastructure and described the NNPC's action as a move in the right direction.

However, he NNPC explained that the problem of fuel distribution in the country was yet to abate, hence the need to employ the service of the private oil firms for the task. Specifically, the company said its depot at Atlas Cove could only accommodate about 40 per cent of national consumption.

The Managing Director of the PPMC, Mr. Reginald Stanley, said if the NNPC did not engage private operators, there would be fuel scarcity.

According to him, the country needs about 35 million tonnes of petrol daily, but the comatose state of the refineries has prompted the corporation to continue with fuel importation.

He however, debunked the allegations that NNPC is receiving bribe from oil firms to import fuel on behalf of PPMC.

He said the company has spent billions of naira to repair Atlas Cove, after the damages done by the Niger Delta militants in July. He therefore assured that the jetty was now working at optimal capacity.